Millions of PF account holders got a bounty of 9.5% interest for the year 2010-11. However there was a lack of clarity on the taxability of the Interest over 8.5% as the finance ministry had notified a interest exemption on PF deposits @8.5%.
In its notification No. 24/2011 dated 13th May,2011, the ministry of finance has revised the rate of interest notified under rule 6(b) of Part A of IVth Schedule to the Income tax act,1961 to 9.5%.
This clears the way of tax exemption on Interest Income from PF deposits @9.5% for the financial year 2010-11.
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